Every morning at 6am, more than two dozen of the world's leading submarine watchers, aviation experts, government specialists, imagery analysts, cryptanalysts and linguists gather at the headquarters of the US Pacific Fleet in Hawaii. Their job is to probe the overnight intelligence reports to guide the activities and strategies of the six aircraft carrier groups, 180 ships and 1500 aircraft that constantly patrol the Pacific and Indian oceans.

The morning meetings are convened by the fleet's top intelligence officer, Captain James Fanell, and are supposed to cover activities emanating anywhere ''from Hollywood to Bollywood'', as the head of US Pacific Command, Admiral Samuel Locklear, likes to put it. But the group never takes long before zeroing in on the country driving the military and diplomatic ''pivot'' to Asia, which was announced by President Barack Obama in Canberra in November 2011 and which now has support from almost every maritime nation in east and south-east Asia.

''Every day it's about China; it's about a China who's at the centre of virtually every activity and dispute in the maritime domain in the east Asian region,'' said Fanell, reading from prepared remarks at a US Naval Institute conference in San Diego on January 31.

Fanell spelt out in rare detail the reasons the US is shifting 60 per cent of its naval assets to the Pacific, including a rotation of 2500 marines near Darwin. He was blunt: The Chinese People's Liberation Army (PLA) Navy is focused on war, and it is expanding into the ''blue waters'' explicitly to counter the US Pacific Fleet. ''My assessment is the PLA Navy has become a very capable fighting force.''

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Some were shocked to hear Fanell detail the extent and intensity of China's carefully orchestrated maritime provocations, especially coming from an officer whose job may make him more of an expert on Beijing's naval manoeuvrings than anyone outside China. Others wondered whether the Pacific Fleet was perhaps lobbying for a greater share of the US military budget or wider authority to act by magnifying the threat.

But it may well be that the most contestable of Fanell's assertions were about the Chinese military's capabilities, not its provocations. For the question on many minds in Washington, Beijing and Canberra is this: Can China actually fight? And the person most anxious to learn the answer is China's new leader: Xi Jinping.

The 59-year-old new president has stated clearly that the military is central to his vision for China. ''We must ensure there is unison between a prosperous country and strong military,'' he said in a pep talk to sailors on board a guided-missile destroyer in December. But his ambition to have a strong, professional fighting force is greatly complicated by an even bigger question that has occupied every Communist Party leader since Mao uttered his famous dictum that ''political power grows out of the barrel of a gun''. Can Xi be sure that the PLA will always be loyal to the party, and specifically to him?

Xi may be able to build a military that is either modern and capable or personally loyal and political. But many in China now believe he can't have both.

The PLA today boasts a 2.25 million-strong standing army and its capabilities have been greatly strengthened by two decades of double-digit budget increases.

Xi has taken charge at a moment when China has been surprising the US and shocking its neighbours with the speedy development of new hardware and the aggressive manner in which it has deployed those tools to support its expanding ambitions.

Top US intelligence analysts and generals have admitted to being caught out by the 2011 flight-testing of China's new J-20 stealth fighter. They were dumbfounded by China's subsequent deployment of the East Wind 21D, the world's first anti-ship ballistic missile, dubbed the ''assassin's mace'' in China and ''the carrier killer'' in the West. China is on track to triple its fleet of maritime strike aircraft by 2020, according to the US Congressional Research Service.

China is simultaneously developing and producing seven types of submarine and surface warships. That's after a decade in which it quadrupled its number of modern submarines, including nuclear submarines designed to carry nuclear-armed ballistic missiles. It has massively expanded production of corvettes, frigates, amphibious ships, and destroyers. In September, China launched its first aircraft carrier, which it has flagged as a training platform for others to come.

The backstop for all these new platforms and capabilities is the PLA's strategic missile force, which possesses conventional ballistic missiles that can destroy satellites in space, as well as several hundred nuclear weapons.

''No other great power today enjoys China's ability to dedicate such vast amounts of capital and personnel so dynamically to such a wide range of new programs,'' says Andrew Erickson, an expert on PLA technology at the US Naval War College's China Maritime Studies Institute. ''China enjoys unparalleled flexibility and adaptability and could increase production rapidly if desired.''

The dizzying display of hard power is sending fear and awe throughout the Asia-Pacific region. But Xi, it seems, is unconvinced that all this shiny hardware can be effectively deployed by an organisation that was designed for civil war and adapted as an internal security force.

High-ranking insiders have come forward to say the Chinese military is rotten to the core. Formal hierarchies are trumped by personal patronage, co-ordination between branches is minimal, and corruption is so pervasive that senior positions are sold to the highest bidders while weapons funding is siphoned into private pockets.

''Corruption has become extremely institutionalised and significant,'' says Tai Ming Cheung, director of the Institute on Global Conflict and Co-operation at the University of California/San Diego. ''It makes it much more difficult to develop, produce, and field the weapons systems required to achieve world-class power projection.''

It's not just corruption. Politics have always played a key role and the PLA retains a Soviet-style dual command structure. A powerful political department sits at the centre of the organisation, while political minders shadow commanders at every level of the enormous hierarchy.

The PLA is one of the world's largest bureaucracies - and behaves accordingly. ''They have a meeting now for everything,'' says Nan Li, associate professor at the US Naval War College's China Maritime Studies Institute. Li says PLA military universities have even been reduced to printing textbooks that instruct commanders how to transcend the tyranny of committee-style decision-making.

''That shows how much the PLA has been defeated by - corroded by - peace,'' he says.

Xi's associates believe he harbours even more serious concerns. They note that Liu Yuan, the senior general who sent shock waves through the party and military establishment after warning in an internal speech that mafia-like knots of patronage and corruption were crippling the PLA, did so only after getting a nod from Xi. ''Only our own corruption can destroy us and cause our armed forces to be defeated without fighting,'' Liu warned in his December 2011 speech.

The two ambitious princelings, as the privileged sons of China's revolutionary leaders are known, have been close friends since the late 1970s.

Another close friend of the Xi family, whose father fought alongside Xi's father when the Chinese Red Army was a hungry, disciplined machine, said Xi was so appalled at the state of the PLA that he had focused his political capital on whipping it into better shape and probing to see which generals he can personally rely on.

The family friend says Xi's relentless inspection program and calls for combat readiness are designed less to prepare for war than to filter out grossly incompetent, unwilling and disloyal generals: ''To sort the horses from the mules you need to walk them around the yard.''

Xi's associates point out that his first real job, as personal assistant to the secretary-general of the Central Military Commission, gave him a ringside seat for studying the art of accumulating power as demonstrated by one of the world's great strongmen, Deng Xiaoping. Deng tightened his ''grip on the gun'', as Communist Party insiders put it, in part by mobilising the military for an invasion of Vietnam in February 1979.

The lesson learnt? ''Without the gun in your hand, who will obey you?'' as Xi's close family friend puts it. ''So the first thing Xi did after his rise was seize military control.''

That's where China's rapidly escalating territorial showdown with Japan, still the world's third-largest economy, comes in. Claims that Xi has exploited or even orchestrated the brinkmanship with Japan might seem preposterous to outside observers, given that a miscalculation could lead to war. But the logic is compelling for those who have grown up near the centre of China's endless and unforgiving internal struggles.

''Promoting people into positions is always a very sensitive question,'' says a retired officer, the son of one of the PLA's most decorated commanders and who was himself working at the PLA's General Staff Department, the operational command centre, when Xi was at the Central Military Commission in 1979. ''This is why Xi is coming to power using a very strong voice on the Diaoyu Islands … like Deng,'' he says.

Indeed, the crisis with Japan seemed to exactly span Xi's ascension to commander in chief, on November 15.

On December 13, the 75th anniversary of the Nanjing massacre, a low-flying China Marine Surveillance Y-12 twin-propeller plane penetrated Japanese airspace - the first such episode since Japan began monitoring half a century ago - and took a snapshot of the largest of the disputed islands out of its left window, a photo that was published widely in the Chinese state media the following day.

On January 10, with Xi firmly in control but now up against the more assertive Japanese administration of Shinzo Abe, Chinese and Japanese surveillance and fighter planes tangled above disputed oil fields north of the Senkakus. On January 14, the PLA Daily reported that the General Staff Department had ordered all units to prepare for battle, in what may have been the first such warning since Deng's debacle in Vietnam.

On January 30, a PLA Navy frigate locked its missile-control radar on a Japanese Self-Defence Forces ship, according to Japanese accounts that were backed by the US but denied by China. Western military officials and diplomats have told me that they have evidence, including from electronic intercepts, that shows that the movements of Chinese boats and ships were micromanaged by the new taskforce chaired by Xi.

The world still knew nothing of these dangerous confrontations when Captain Fanell gave his remarkable speech in San Diego the following day, January 31.

Asia's two heavyweights - America's key ally and its global rival - were one itchy trigger finger away from exchanging live fire on the water, while Chinese J-10 and Japanese F-15 fighters were buzzing overhead, according to Western military sources.

''If you are the Japanese captain, you would have an incredibly uncomfortable choice to make very quickly,'' says a Western diplomat who has been following the dispute closely. ''You're seconds away if that thing decided to fire.''

What had been hypothetical musings about the PLA's combat capability took on a more urgent tone.

But the spectre of war is not the only possible explanation for Xi's sabre rattling and demands for combat readiness. For even as Japanese leaders and US officials were publicising their concerns about a region on the brink of naval conflict, it became clearer that Xi and his close military confidants remained squarely focused on domestic politics. Indeed, General Liu Yuan - the same reputedly hawkish princeling general, who is close to Xi and who had blasted corruption in the military - counselled that war with Japan would be disastrous.

At the same time, another top-level document emerged: a speech delivered in December by Xi himself, in which he gave thundering confirmation that the PLA's primary function is to defend the regime, not China. This was the lesson learnt from the Soviet Union's collapse, he said.

''In the Soviet Union, where the military was depoliticised, separated from the party and nationalised, the party was disarmed,'' Xi warned, according to an extract of his speech that was published by journalist Gao Yu and broadly corroborated by other sources. Nobody in the vast Soviet Communist Party, Xi averred, ''was man enough to stand up and resist''.

There is little doubt the Communist Party has been sharpening its identity in a post-communist world by defining itself against the West, fanning nationalist fervour, and promising a restoration of China's ancient grandeur. Xi thus has little choice but to keep pumping enormous resources into the war machine if he is to justify his party's continuing monopoly on power. In recent weeks the PLA Navy has sent flotillas to the far reaches of the South China Sea.

Ultimately, however, Xi's speech affirmed that the PLA's primary task is to defend the Communist Party against internal political threats - and desist from taking part in coups - rather than prepare to face external military threats. The recent drums of war may be a sign of weakness more than strength.

China's provocations against Japan were ''evidence of profound domestic insecurity rather than rational policy'', says a Beijing diplomat who closely studies China's military machinations.

''It is the fact of party control,'' he says, ''that makes the PLA weak. Everything else - the corruption, the risk aversion, the hierarchy - is a symptom of that.''

Then, too, there is the very real risk that if China or Japan miscalculates over the Senkaku Islands and actually does spark a war, China may lose - even without direct US intervention.

The PLA is gaining the hardware but there are growing doubts about China's actual fighting capabilities in some sections of the Chinese military, foreign diplomatic corps and US academia. They believe the PLA lacks the co-ordination, command structures, training and incentives to be a professional fighting force.

''Our assessment is they are nowhere near as effective as they think they are,'' a Beijing-based defence attache from a NATO country says.

''When Xi tells his troops to be ready for war, it's really an admission that they're in disarray. He's saying, 'You guys are drunk, fat and happy, siphoning off all the money into private accounts, and you need to get real.'''